Why crypto plunged under Trump presidency despite SEC’s Paul Atkins
The crypto market has declined sharply during Donald Trump’s second term despite a regulatory environment seen as friendlier under SEC Chair Paul Atkins. Bitcoin (BTC) has retraced all Trump-era gains and sits near October 2024 lows; many altcoins (notably Shiba Inu and Cardano) are close to 2022 lows. Contributing factors cited by analysts include: 1) the speculative Official Trump meme coin that drained liquidity after surging to $50 then collapsing below $5; 2) elevated geopolitical risk — global tariffs and the Iran war — which pushed oil and gas prices higher, raised inflation pressure and restrained Fed easing; 3) post-liquidation deleveraging after an Oct. 10 liquidation event that wiped out 1.6 million traders and over $20 billion, leaving futures open interest under $100 billion and muted funding dynamics; 4) legislative gridlock over the CLARITY Act after Coinbase withdrew support, stalling clarity on stablecoin reward frameworks and industry-CBDC/banking concerns. Despite congressional moves like the GENIUS Act and progress toward SEC/CFTC duty separation, uncertainty on tariffs, energy-driven inflation, liquidity drains from meme tokens and stalled legislation have combined to create a bearish trading environment. Key metrics: BTC at multi-month lows, futures open interest below $100B, Crypto Fear & Greed Index in the red, October 10 liquidation >$20B and ~1.6M traders wiped out. Traders should watch liquidity flows (meme token impacts), OI/funding rates, on-chain liquidation risk, and macro drivers (oil prices, Fed guidance) for near-term positioning.
Bearish
The article points to multiple liquidity and macro-driven forces that favor a bearish outlook. Key immediate drivers are: a large liquidity drain from the highly speculative Trump meme coin; sustained deleveraging after the October liquidation event that reduced futures open interest below $100B; and elevated macro risk from tariffs and the Iran conflict that lifted oil prices and complicated Fed policy. Legislative uncertainty over the CLARITY Act and withdrawal of industry support (Coinbase) add regulatory ambiguity, which typically suppresses risk appetite. Historically, similar episodes — large liquidation cascades (e.g., 2022 market stress) and meme-coin dominated liquidity flights — led to prolonged volatility and downtrends before market structure and macro conditions improved. Short-term: expect higher volatility, lower liquidity, and downward pressure on altcoins; funding rates may stay muted and OI subdued, limiting leveraged long positions. Long-term: if regulatory clarity (CLARITY Act passage, stablecoin rules) and easing macro conditions (oil prices stabilizing, Fed pivot) arrive, markets could recover, but persistent geopolitical and policy risks make timing uncertain. Traders should reduce size on leveraged longs, monitor on-chain liquidity metrics, OI/funding rates, and macro headlines for directional shifts.